V · Forward model · Client incentives

Assumptions & reasoning

• Every actual on this line is NEGATIVE. Client incentives are contra-revenue, not an expense: they are deducted from the four gross lines to reach reported net revenue, which is why they have to be a vertical rather than corporate overhead. $4,680M in the June quarter, 28.7% of gross revenue.
• The same 63.7% EBITDA margin is applied here as on the four positive lines. That is not an assumption about the profitability of an incentive payment; it is arithmetic. Consolidated EBITDA is a margin on NET revenue, so a different margin on the contra line would stop consolidated EBITDA reconciling to the sum of the verticals.
• No per-line net yield exists anywhere in this model. Visa publishes no split of incentives by revenue category, so any statement of the form `data processing net of incentives` would be manufactured. The line is modelled whole and the four gross lines are modelled gross.
• Seasonality on this line is individually unreliable - 7.2% amplitude against a 5.1% worst spread, ratio 1.42, with only the soft fiscal Q2 unanimous - and incentive timing follows contract renewals rather than the calendar. The factors are carried only because seasonalising the four gross lines while leaving the large negative contra line flat breaks the offset and overstates fiscal Q4 net revenue by 0.6 points.